The average tax refund for 2009[3] is around $3036, up over 10% on 2008 returns. It’s a pretty sizable sum when you think about it. It’s a really nice vacation, a good bit of a mortgage payment, and your credit card debt’s worst nightmare. If, however, you’re more of a saver than a spender, you might be curious how large that amount can really be.

Ever wonder how much $3036 would be in 5 years if it were in a certificate of deposit[4]? A Treasury bond? How about invested in stocks? What if you just left it in cash? What about ten years? Twenty? Forty? Let’s find out.

1 Year

CD (@1.54% APY): $3,082.75

Treasury (@0.40% APY): $3,048.14

Stocks (@9.00% APY): $3,309.24

Cash (@0.00% APY): $3,036.00

5 Years

CD (@3.00% APY): $3,519.56

Treasury (@2.55% APY): $3,443.34

Stocks (@9.00% APY): $4,671.26

Cash (@0.00% APY): $3,036.00

10 Years

CD (@3.00% APY): $4,080.13

Treasury (@3.81% APY): $4,412.59

Stocks (@9.00% APY): $7,187.32

Cash (@0.00% APY): $3,036.00

30 Years

CD (@3.00% APY): $7,369.17

Treasury (@4.68% APY): $11,973.28

Stocks (@9.00% APY): $40,280.67

Cash (@0.00% APY): $3,036.00

The point of this post isn’t to say that one “investment” is better than another, but outline how seemingly small differences can result in big differences if you throw a few decades in the mix. I think we all intuitively understand that but unless you see the numbers, it’s not clear how large those differences are.

Data Source

For CD rates we turn to our table of best CD rates[4] (for periods beyond 5 years, we simply used the 5 year rate). For Treasury bonds, we relied on Bloomberg’s U.S. Treasuries data[5]. For Stocks we used the classic 9% rule of thumb rate.